A Florida appellate court has ruled that Granada Insurance Company must pay its policyholders’ attorney’s fees after voluntarily dismissing a lawsuit it brought against them, even though the insureds had never filed a claim in the first place.
The decision issued July 9, 2025, by the Third District Court of Appeal, centers on a commercial general liability (CGL) policy held by T & G Locksmith Corp. and related parties. Granada had sued the locksmith business in Miami-Dade County Circuit Court, seeking a judicial declaration that there was no coverage for a motor vehicle accident. However, the locksmiths never filed a claim or asked for coverage. In fact, they explicitly stated, both in a motion to dismiss and in legal responses, that the policy didn’t apply to the accident.
Despite those clear acknowledgments, Granada continued to pursue the declaratory judgment action for nearly eleven months. Eventually, the insurer voluntarily dismissed the case. That move, according to the appellate court, effectively ended the lawsuit in the insureds’ favor. Under Florida law, it entitled them to recover their legal fees.
At the heart of the ruling is Florida Statute § 627.428, a provision that allows policyholders to collect attorney’s fees when they prevail against their insurer in a coverage dispute. Even though the locksmiths never demanded coverage, the court found that Granada’s decision to withdraw the lawsuit functioned as a “confession of judgment.” That classification activates the fee-shifting statute.
The appellate panel emphasized that the facts of this case were unusual. There was no actual disagreement over coverage. The insureds had conceded from the outset that the CGL policy didn’t cover the incident. By filing a lawsuit under those conditions, Granada effectively created a dispute where none existed. By abandoning it nearly a year later, the court found, the company became responsible for the other side’s legal bills.
The ruling offers a clear signal to insurance companies operating in Florida. Preemptive legal actions, especially in the absence of an active claim or controversy, can carry financial consequences. For insurers, it underscores the importance of assessing litigation risk before pursuing declaratory relief, particularly when there is no live coverage dispute.
While the court’s opinion didn’t explore the policy language in detail, the case speaks more broadly to litigation strategy and claims management in the commercial insurance space. It also serves as a cautionary tale about the costs of defensive lawsuits that outpace the facts on the ground.
The decision is not final, pending any motion for rehearing. Still, it adds to the growing body of case law in Florida interpreting how and when insurers may be liable for policyholders’ legal fees, even in cases where coverage isn’t ultimately provided or disputed.
